Well what to say about yesterday.... the world got spooked by the escalating tension between North Korea and the USA, and the technical support levels went out the window as global indices sold off and "safe haven" assets such as gold rose. Mind you, if the prospect of nukes starting to get thrown about was truly real I expect we would be even further down. Granted markets were getting toppy anyway, with the SP making record highs each day till it hit 2490 so a pullback was due anyway, just maybe one that wasn't quite so fast or driven by the threat of nuclear war! We dropped below all the daily channels yesterday, and might well be on a path for 7250 soon.
FTSE 100 outlook and prediction
A Friday after a big sell off with a lot of fear in the market. Don't think its going to get overly bullish today but you never know - if one of them backs down then it may well turn the tables. I am watching 7330 and 7310 as support areas this morning, with 7390 as resistance. I don't think traders will be too confident to hold longs over the weekend just in case things escalate. I imagine that most will wait until it looks like things have calmed down/stabilised a bit before piling into longs again. As such we need to exercise caution today, but it certainly looks like the FTSE could well be heading for the 7250 level in the next few sessions.
August is traditionally quite a weak month anyway, so a bottom/low around this 7250 level during the month, before a stronger close towards the end of the year does look possible, as long as no nukes are actually fired!
Resistance wise today I am watching the 7390 level, and if the bulls were able to push above this and the psychological 7400 level then we should see a rise towards the 2 hour coral line at 7497 currently. But probably not today.
We are at the bottom of the Raff channels after that fall, and there are several positive RSI divergences on the 30min chart as well, so any positive looking news over NK would see us rally back as the dip would be seen as a buying opportunity.
